Fraudulent Inducement

Fraudulent inducement has been defined as simply as where “one has been led by another’s guile, surreptitiousness or other form of deceit to enter into an agreement to his detriment.” Security Const. Co. v. Maietta, 25 Md. App. 303, 307 (Md. App. 1975). It is a subspecies of fraud, focused on where actions induce another into entering a contract. Councill v. Sun Ins. Office, 146 Md. 137 (1924). Its components include that a defendant made a false representation; the falsity was either known or made with reckless indifference; the misrepresentation was made to induce a party into action; the party justifiably relied on the misrepresentation; and as a result experienced damage. Nails v. S & R, Inc., 334 Md. 398, 415, 639 A.2d 660 (1994). Misrepresentations of material facts – facts on which a reasonable person would rely in making a decision – can be statements, conduct, or action. MPJI § 11:4, at 320. Although fraud must be demonstrated by “clear and convincing” evidence, that standard only applies to a burden of proof at trial, and not a “burden of production,” such that a prima facie case only requires “some competent evidence, which if believed and given maximum weight, would establish all of the required legal elements of the tort.” Darcars Motors of Silver Spring, Inc. v. Borzym, 150 Md.App. 18, 53, 54 (2003).

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